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McEwen finishes 2019 in the black

Mar 17, 2020

McEwen Mining Inc. (NYSE: MUX) (TSX: MUX) today reported fourth quarter and full year results for the period ended December 31, 2019.

  • For the full year 2019, production was 174,420 gold equivalent ounces(1) (GEOs)(see Table 1), compared to 175,640 GEOs in 2018.
  • Our three 100% owned mines generated a cash gross profit of $33.7 million(2) in 2019, and a gross profit of $9.0 million. Cash gross profit, is a new non-GAAP measure used for the first time in our Form 10-K, and is intended to evaluate our ability to generate cash flow. Cash gross profit is calculated by adding back depletion and depreciation to gross profit, which is a GAAP measure.
  • We received $8.9 million in dividends from our interest in the San José mine in 2019 (49% owned). 
  • We invested $47.3 million on advanced projects and exploration in 2019, which contributed to our consolidated net loss of $59.7 million, or $0.17 per share.
  • We performed 132 miles (213 km) of drilling in 2019, with approximately 90% completed at the Black Fox Complex, and the balance at the Gold Bar Property. 
  • A review of the Gold Bar reserve estimate is ongoing, and a downward revision of the reserve estimates is anticipated (see the Gold Bar Mine section below for further details). 
  • The Grey Fox project Indicated resource estimate increased 33% (see Table 2.4).
  • Exploration delivered many high-grade drill intersections on extensions of the Black Fox Mine, in the Grey Fox area, and on the Stock Property, where drilling led to the discovery of a new gold mineralized zone at Stock West.
  • Our year-end conference call will take place tomorrow, Tuesday, March 17th at 2pm EDT. Details are provided below.

Black Fox Mine, Canada (100% Interest)

Production from Black Fox in 2019 was 35,721 GEOs. Compared to 2018, gold production decreased by 27%, due to operational challenges in the year and depleting reserves. For 2019, total cash costs and AISC were $825 and $1,225 per GEO, respectively.

Our exploration activities during 2019 included 489,000 feet (149,000 m) of surface-staged diamond drilling, and 57,000 feet (17,500 m) of underground-based exploration drilling. We invested $25.5 million in 2019 on exploration across the Black Fox Complex, compared to $22.0 million in 2018.
Development of underground access to the Froome ore body, located approximately 3,000 ft (900 m) away from the Black Fox open pit, commenced in December 2019. Mining from Froome is scheduled to begin in Q4 2021, and continue to 2023.
A feasibility study examining the development of the Grey Fox deposit by open pit mining methods is being started, and is expected to be complete in Q4 2020. Additionally, to further expand future production potential, we are considering dewatering the Stock Mine to enable us to drill the Stock West discovery and the depth extension of the mine from underground.
Production guidance for 2020 is 35,000-40,000 GEOs at cash costs and AISC of between $1,000-$1,150 and $1,150-$1,250 per GEO, respectively. Higher cash costs reflect the impact of development and related costs being expensed over the short mine life.

The mineral resource and reserve estimates for the Black Fox mine have been updated (Tables 2.1 to 2.4) to reflect mine depletion, additions from exploration, and the deletion of certain resource blocks that are deemed inaccessible due to prior mining activity. The mineral resource for the Stock East and Grey Fox projects were updated and increased.

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